Grassley: ‘Booze or women or movies’ are reasons people don’t invest

Washington (CNN)Sen. Chuck Grassley, R-Iowa, offered a frank explanation over the weekend of who would benefit from a provision in the Senate tax bill that virtually eliminates the estate tax for all but a very small number of Americans.

“I think not having the estate tax recognizes the people that are investing,” Grassley told the Des Moines Register. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”

In a statement to CNN on Monday afternoon, Grassley said his comments were taken out of context.

“My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die,” he said. “The question is one of basic fairness, and working to create a tax code that doesn’t penalize frugality, saving and investment. That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement.”

Unlike the House GOP bill, which proposes an eventual repeal of the estate tax, Senate Republicans have not proposed going that far but look to double the exemption rates from their current levels.

Grassley, the chairman of the Senate Judiciary Committee, has long been opposed to the estate tax, calling it unfair, particularly to farmers, ranches and small business owners who inherent their estates.

The estate tax — which imposes a top rate of 40% — only touches about 0.2% of estates. Only those estates worth more than $5.49 million this year (or $10.98 million for married couples) even have to file an estate tax return after a person dies. And then only about half of those end up being taxable after factoring in deductions and credits, according to the Tax Policy Center.

As for family farms affected, the numbers are tiny. The Tax Policy Center estimates just 80 family-owned businesses and farms will have to pay any estate tax in 2017.

“The estate tax is counter-productive to jobs and economic growth. It just isn’t needed,” Grassley said in a January press release. “I hope this is one of many tax burdens that will fall by the wayside through comprehensive tax reform or any other means that might be available.”